Grandfathered Accounts - Fee Schedules

Posted By: McFly

Grandfathered Accounts - Fee Schedules - 03/20/17 11:53 PM

I'm relatively new to my Bank and am working on a Reg DD change in terms notice, when I discovered that my Bank does not have an online fee schedule for account types that are no longer offered (aka grandfathered accounts). These grandfathered accounts have different fee structures that are known internally, but are not publically available. Currently, if customers with grandfathered accounts ask about fees, our customer service area provides this information to them, as required under Reg DD.

While not providing the fee schedule for grandfathered accounts is permissible under the regulations, it does seem problematic to me, as our customers with grandfathered accounts could be confused by looking at our fee schedule online for accounts that are currently offered, which have different terms.

Do other Banks post fee schedules for grandfathered accounts?

Thanks in advance BOL community for your insight.
Posted By: Elwood P. Dowd

Re: Grandfathered Accounts - Fee Schedules - 03/21/17 12:50 PM

The timing requirement for account disclosures (including fees) are
* at account inception and
* upon request.

The first is of no concern to you as you do not offer these accounts any more, but the second might be. You are not obligated to consider the fact that it might be confusing to the customer if he or she cannot find the fee schedule for their account online. However, if they ask you for it, you need to hand it to them.

My recommendation would be to discontinue these accounts or send out a notification of a change in terms that would homogenize them with the accounts you are opening today.
Posted By: McFly

Re: Grandfathered Accounts - Fee Schedules - 03/21/17 03:26 PM

Thanks Ken for the insight.

Homogeneity is ideal, but there may be revenue considerations as to why we do not take that approach.
Posted By: Compliance504

Re: Grandfathered Accounts - Fee Schedules - 10/27/21 04:50 PM

We are discontinuing some old grandfathered accounts....we moving various old savings accounts into our statement savings account...

We are sending out letters that note the changes along with a new TIS disclosure....

The various changes include-new account name, new rate and APY, new dormant fee, new minimum balance....

As long as we are providing a new TIS, does it matter how the letter is worded?
Posted By: BrianC

Re: Grandfathered Accounts - Fee Schedules - 10/27/21 04:59 PM

The commentary to 1030.5 is what you have.

1. Form of notice. Institutions may provide a change-in-term notice on or with a periodic statement or in another mailing. If an institution provides notice through revised account disclosures, the changed term must be highlighted in some manner. For example, institutions may note that a particular fee has been changed (also specifying the new amount) or use an accompanying letter that refers to the changed term.

Appendix B-2 provides model language should you wish to use it.

B-2--Model Clauses for Change in Terms
On (date), the cost of (type of fee) will increase to $----.

On (date), the interest rate on your account will decrease to ----% with an annual percentage yield of ----%.

On (date), the minimum [daily balance/average daily balance] required to avoid imposition of a fee will increase to $----.

You are not required to post terms of every active account time online, nor should you. You have bigger UDAAP issues advertising account terms that are not currently available for new accounts on your website. Remember the purpose of the website is advertising under 1030.8, not providing disclosures under 1030.4. That is why Reg DD requires that you provide disclosures "in writing in a form the customer may keep." If a grandfathered customer has questions about their account, the regulation assumes they should be looking back to their account opening documents.
Posted By: Compliance504

Re: Grandfathered Accounts - Fee Schedules - 10/27/21 06:03 PM

Thank you Brian.......

My main concern was disclosing the new rate and APY in the letter.....because it is a variable rate and we are disclosing what it is now.....the letters do give the effective date and notices are being mailed a month prior to the effective date....

In the letter we just list the new rate and APY but the accompanying TIS disclosure will give all the details about the rate.....I wanted to make sure that was ok....or if the letter should state something about a variable rate.....
Posted By: BrianC

Re: Grandfathered Accounts - Fee Schedules - 10/27/21 09:29 PM

If the old account was a variable rate, then that is not a term that is changing so there would be no need to disclose an interest rate or APY.
Posted By: Compliance504

Re: Grandfathered Accounts - Fee Schedules - 10/28/21 02:25 PM

That makes sense to me Brian....thank you....I did not think stating a rate and APY in a letter would be good....since it is a variable rate.....

We provide the name of their new account in the letter and any fees that changed.....along with a new they will be able to follow the rate changes on our rate sheets by the name of the account....

Thank you so much!